Australian Internet of Things (IoT) technology company X2M Connect Limited (ASX:X2M) has announced a $2 million entitlement offer aimed at fueling its expansion into new markets and advancing its presence in the renewable energy sector. The non-renounceable 1 for 7 entitlement offer, priced at $0.04 per share, seeks to issue approximately 50 million new shares to bolster the company’s business development initiatives and operational capabilities.
X2M Connect, headquartered in Melbourne, is a leading provider of IoT solutions, primarily serving the utilities sector. The company’s proprietary platform, "Vision by X2M," connects devices such as water, gas, and electricity meters to the internet, facilitating data exchange and remote device control. This technology has seen substantial adoption, with over 530,000 devices already connected across multiple communication technologies, providing real-time data and control to a growing customer base.
The funds raised through the entitlement offer will be strategically deployed to scale up business development activities in Australia, support market entry into the Middle East and India, and customise X2M’s renewable energy platform. This move comes as the company eyes significant growth opportunities in these regions, particularly in the renewable energy generation and battery storage markets.
CEO Mohan Jesudason highlighted the significance of this offer in transforming X2M into a larger software entity. "Our established businesses represent a significant addressable market which we are methodically harvesting. With strong momentum and significant growth opportunities ahead, we now have the chance to take X2M to the next level," Jesudason said. He emphasised the company's commitment to the utility sector, where X2M has demonstrated proven performance, and its intent to capitalise on the growing demand for artificial intelligence and renewable energy solutions.
One of the key initiatives supported by the entitlement offer is X2M’s entry into the Middle East market. The company recently signed a term sheet with Dicode Technologies LLC to license its platform for use in the United Arab Emirates (UAE). This partnership will enable Dicode to offer "Metering as a Service" in the UAE, with plans to expand into Saudi Arabia and Oman. The initial focus will be on the UAE’s gas sector, where X2M’s high-margin software is expected to yield approximately $400,000 in EBITDA for every 100,000 gas meters connected.
In addition to its Middle East expansion, X2M is poised to make a significant impact in the renewable energy sector. The company has entered into a strategic agreement with GreenRock Energy Co., Ltd, a Taiwanese firm specialising in renewable energy generation and battery management. This partnership aims to leverage X2M’s platform to offer smart community solutions that integrate domestic solar, home energy management, and community battery storage. The first revenues from this initiative are anticipated within the current financial year.
X2M is also evaluating opportunities in the Indian market, where the government’s push to digitize the electricity grid presents a lucrative opportunity. The Indian market, with its vast population and significant government incentives, has been identified as a key area of interest. While the funds allocated to this project are modest, X2M sees considerable potential upside if the initiative proceeds successfully.
The entitlement offer is open to eligible shareholders, with the record date set for 22 August 2024. The offer is scheduled to close on 11 September 2024, with new shares expected to be allotted and commence trading by mid-September.
This strategic capital raise underscores X2M’s commitment to expanding its global footprint while continuing to innovate within the utility sector. With a solid foundation in the Asia-Pacific region and ambitious plans for further international expansion, X2M Connect is positioning itself as a formidable player in the IoT and renewable energy markets.
